Scams, triggers and how to make sure your marketing materials are distinct from the latest shams

Financial scams date back to the Roman Empire, when Julianus tricked the army into buying the throne for a million in gold he never possessed. Even the great state of Louisiana has been used to defraud investors and the French government, until people realized they’d spent a life savings on swampy alligator territory. Bernie Madof’s shenanigans hold nothing to Whitaker Wright, who similarly had companies that seemed legitimate on paper but were a house of cards. And, Wright predated Madof by nearly 100 years.

Worse, financial investment shams involving the elderly have been so much on the rise, that government agencies like the Federal Bureau of Investigation (“FBI”) note them as one of the top crimes of the current times. 

And the net is wide. A recent FINRA Investor Education Foundation survey found that more than 8 in 10 consumers have received communications about financially fraudulent investments.  Of those who do fall for the scam, the older generations are three times more likely to have lost money than others. Additionally, financial scammers target men more often than women.  According to the FBI, financial investment fraud “involves the illegal sale or purported sale of financial instruments. The typical investment fraud schemes are characterized by offers of low- or no-risk investments, guaranteed returns, overly-consistent returns, complex strategies, or unregistered securities.”

As scams become more complex than a nice note from that Nigerian fellow, it can be helpful to make sure your marketing materials don’t fall into any of the red flag areas similar to the financial tricksters. The most basic may be what you are already doing. Many consumer protection advocates urge consumers to verify that a financial advisor is licensed, so ensuring that your communications always indicate your licensing is vital. Cold Calls and Telephone scams continue. Even though you’d think most folks are savvy enough to not make friends with strangers selling investments on the phone, people still get lured in.  Be clear in your phone calls, if necessary.

Obviously none of your marketing materials to your clients or their employees will involve transferring large sums of cash into their accounts to be held for a relatively short period time for international strangers. However, free lunches to learn about investment opportunities that may be ponzi or pyramid schemes are common now.  So too are free lunches for investment products pitching high returns. If you are providing free lunches on a regular basis to your client’s employees, it may be helpful to keep the topic to educational materials or themes.

This also goes for avoiding “the next big thing.”  While it may be helpful to use a relevant new market to ensure that your communications are relevant, like clean energy investment or work share investment groups, take note that financial scammers too are pitching on similar topics.  Other common scam topics include private securities offerings for companies about to go public as well as utility companies.  Additionally, financial scams often involve rushed or hurried opportunities. While good marketing is timely, relevant and compelling, it shouldn’t require immediate action by a client or their employee. Make sure that your call to action at the end of your newsletter aims more towards thoughtful action than harried response.

When communicating with clients or their employees about funds and payments, be clear about how to direct funds into accounts. Many scams involve depositing checks into new accounts or setting up automatic withdrawals. Similarly, phishing scams still exist seeking confirmation of banking account information by fake banks or fake companies.  Many consumer advocates urge the public to avoid: clicking links in an email to verify an account (unsolicited), verifying account information over the phone (unsolicited) or accepting checks for more than the anticipated amount without previous information.

Tax schemes are also still abundant. If you need to communicate about potential tax implications of a change in accounts or a change in an employee’s status, for example, an employee over the age of 70.5 might need to discuss required minimum distributions from certain accounts, be careful to avoid how financial scammers communicate, to ensure confidence by your clients and employees. Consumer advocates suggest avoiding IRS and tax scams that urge immediate action and also those that request verification of accounts, as discussed above, but also involve any threats of penalties.

Redemption and straw man bond schemes are still occurring. Those schemes involve official sounding forms, like bills of exchange and promissory bonds, or IRS forms like 1099s to add legitimacy. The scheme sells the idea that there are government bonds and secret accounts “out there” that merely need a kit of papers to cash in on.  When communicating about bonds or funds of bonds, it may be helpful to keep in mind that your client’s employees may be receiving these scam messages and might need clarification.

Scams specific to seniors include all of the above, but notably, also include financial abuse by their own family members. Almost 90% of elder financial crimes are committed by close family members of the older person. It could be helpful to ensure that your systems are set up to only give financial information or access to it to the individual with financial power of attorney, especially for clients with a significant number of retirees on their plan.